Question 1

A corporation cannot acquire, hold, or convey property in its own name.

Accepted Answer

A) True 
 B)False

Question 2

Anyone who buys the interest of a limited liability partnership (LLP) partner is automatically a partner.

Accepted Answer

A) True 
 B)False

Question 3

In the management of a limited liability partnership, _____.

Accepted Answer

A)  the LLP pays income taxes 
B)  management decisions cannot be altered even by agreement 
C)  only some partners have a say in its management 
D)  new partners cannot join without the unanimous consent of the current partners 
A)  the LLP pays income taxes 
B)  management decisions cannot be altered even by agreement 
C)  only some partners have a say in its management 
D)  new partners cannot join without the unanimous consent of the current partners

Question 4

Which of the following run the risk of unlimited personal liability?

Accepted Answer

A)  Partners in a limited partnership 
B)  Partners in a general partnership 
C)  Shareholders in S Corporations 
D)  Corporate shareholders 
A)  Partners in a limited partnership 
B)  Partners in a general partnership 
C)  Shareholders in S Corporations 
D)  Corporate shareholders

Question 5

Attempts to require franchisees to buy products, equipment, and supplies exclusively from the franchisor may violate the prohibition in the _____ Act against tie-in sales.

Accepted Answer

A)  Sherman 
B)  USA PATRIOT 
C)  Clayton 
D)  Small Business 
A)  Sherman 
B)  USA PATRIOT 
C)  Clayton 
D)  Small Business

Question 6

Which of the following statements is true of limited liability partnerships (LLPs)?

Accepted Answer

A)  The partners are not required to file an LLP form with the state. 
B)  The partners maintain an adequate amount of professional liability insurance. 
C)  They are relatively difficult to organize around an existing partnership. 
D)  They necessitate that all existing partnerships be dissolved. 
A)  The partners are not required to file an LLP form with the state. 
B)  The partners maintain an adequate amount of professional liability insurance. 
C)  They are relatively difficult to organize around an existing partnership. 
D)  They necessitate that all existing partnerships be dissolved.

Question 7

A turnkey operation can be best described as a:

Accepted Answer

A)  franchise in which the franchisor builds and equips the place of business and leases it to the franchisee. 
B)  limited liability partnership in which partners frequently rotate in and out. 
C)  franchise operated by a person as his or her own personal property. 
D)  franchise in which the franchisee carries out the advertisement campaigns. 
A)  franchise in which the franchisor builds and equips the place of business and leases it to the franchisee. 
B)  limited liability partnership in which partners frequently rotate in and out. 
C)  franchise operated by a person as his or her own personal property. 
D)  franchise in which the franchisee carries out the advertisement campaigns.

Question 8

Describe the characteristics of a corporation.

Accepted Answer

A corporation is treated as an entity se

Question 9

Publicly offered partnership interests are:

Accepted Answer

A)  generally tax shelters for the original purchasers during the early years of ownership. 
B)  of vital interest to persons hoping to actively manage a business. 
C)  the primary method of creating general partnerships. 
D)  generally unattractive to investors in the early years of ownership. 
A)  generally tax shelters for the original purchasers during the early years of ownership. 
B)  of vital interest to persons hoping to actively manage a business. 
C)  the primary method of creating general partnerships. 
D)  generally unattractive to investors in the early years of ownership.

Question 10

What are some of the strategies a corporation can employ to minimize taxation disadvantages?

Accepted Answer

When the corporation is involved in a bu

Question 11

The advantages of sole proprietorship and partnership taxation include the:

Accepted Answer

A)  lessening of tax burden if the shareholders are active in the operation of the business. 
B)  reduction of tax burden experienced by shareholders by keeping the dividend rate constant. 
C)  reduction of the tax liability on the owners' other income by the amount of their individual losses. 
D)  exemption of privilege taxes for doing intrastate business in another state. 
A)  lessening of tax burden if the shareholders are active in the operation of the business. 
B)  reduction of tax burden experienced by shareholders by keeping the dividend rate constant. 
C)  reduction of the tax liability on the owners' other income by the amount of their individual losses. 
D)  exemption of privilege taxes for doing intrastate business in another state.

Question 12

In a(n) ______, shareholders directly report their share of the corporation's losses or earnings on their individual tax returns.

Accepted Answer

A)  S corporation 
B)  trust 
C)  franchising agreement 
D)  corporation 
A)  S corporation 
B)  trust 
C)  franchising agreement 
D)  corporation

Question 13

When it comes to tax liability, limited liability companies (LLCs):

Accepted Answer

A)  in all states are required to file annual reports with the secretary of state. 
B)  are taxed as partnerships. 
C)  do not require partners to report their share of the LLC's profits on personal tax returns. 
D)  are taxed as corporations. 
A)  in all states are required to file annual reports with the secretary of state. 
B)  are taxed as partnerships. 
C)  do not require partners to report their share of the LLC's profits on personal tax returns. 
D)  are taxed as corporations.

Question 14

A _____ provides the greatest ease of management.

Accepted Answer

A)  close corporation 
B)  sole proprietorship 
C)  general partnership 
D)  limited partnership 
A)  close corporation 
B)  sole proprietorship 
C)  general partnership 
D)  limited partnership

Question 15

"Piercing the corporate veil" implies that:

Accepted Answer

A)  a corporation is held liable for money laundering. 
B)  corporate shareholders are stripped of their limited liability to prevent unfair results. 
C)  an entity is treated as one and the same as its owners. 
D)  members will not be personally liable for the debts. 
A)  a corporation is held liable for money laundering. 
B)  corporate shareholders are stripped of their limited liability to prevent unfair results. 
C)  an entity is treated as one and the same as its owners. 
D)  members will not be personally liable for the debts.

Question 16

By forming a limited liability partnership (LLP), the personal assets of partners not involved in wrongdoing by other members of the firm will be sheltered from malpractice claims against the firm.

Accepted Answer

A) True 
 B)False

Question 17

When a general partner sells his or her partnership interests, the purchaser:

Accepted Answer

A)  is granted automatic partnership by operation of law. 
B)  is granted partnership only after he divests all interests in other general partnerships. 
C)  does not become a partner until he or she is nominated by the director and unanimously accepted by other members. 
D)  does not become a partner until he or she is unanimously accepted by the other partners. 
A)  is granted automatic partnership by operation of law. 
B)  is granted partnership only after he divests all interests in other general partnerships. 
C)  does not become a partner until he or she is nominated by the director and unanimously accepted by other members. 
D)  does not become a partner until he or she is unanimously accepted by the other partners.

Question 18

Ira is deeply involved in the management of a certain business. If Ira dies, the business entity would be considered legally dissolved as a result of Ira's death if:

Accepted Answer

A)  she was a shareholder of a corporation. 
B)  the business is a partnership and Ira is a partner in it. 
C)  the business is a corporation. 
D)  the business is a Subchapter S corporation. 
A)  she was a shareholder of a corporation. 
B)  the business is a partnership and Ira is a partner in it. 
C)  the business is a corporation. 
D)  the business is a Subchapter S corporation.

Question 19

Generally, the owners of a corporation are personally liable for its debts.

Accepted Answer

A) True 
 B)False

Question 20

If a business involves high risk, a single factor such as _____ will be so important as to outweigh other factors.

Accepted Answer

A)  limited liability 
B)  taxation 
C)  formalities 
D)  financing 
A)  limited liability 
B)  taxation 
C)  formalities 
D)  financing

Exam 26: Which Form of Business Organization

A corporation cannot acquire, hold, or convey property in its own name.

Anyone who buys the interest of a limited liability partnership (LLP) partner is automatically a partner.

In the management of a limited liability partnership, _____.

Which of the following run the risk of unlimited personal liability?

Attempts to require franchisees to buy products, equipment, and supplies exclusively from the franchisor may violate the prohibition in the _____ Act against tie-in sales.

Which of the following statements is true of limited liability partnerships (LLPs)?

A turnkey operation can be best described as a:

Describe the characteristics of a corporation.

Publicly offered partnership interests are:

What are some of the strategies a corporation can employ to minimize taxation disadvantages?

The advantages of sole proprietorship and partnership taxation include the:

In a(n) ______, shareholders directly report their share of the corporation's losses or earnings on their individual tax returns.

When it comes to tax liability, limited liability companies (LLCs):

A _____ provides the greatest ease of management.

"Piercing the corporate veil" implies that:

By forming a limited liability partnership (LLP), the personal assets of partners not involved in wrongdoing by other members of the firm will be sheltered from malpractice claims against the firm.

When a general partner sells his or her partnership interests, the purchaser:

Ira is deeply involved in the management of a certain business. If Ira dies, the business entity would be considered legally dissolved as a result of Ira's death if:

Generally, the owners of a corporation are personally liable for its debts.

If a business involves high risk, a single factor such as _____ will be so important as to outweigh other factors.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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